5/31/2005

Southeast retail center caught in the crossfire: Washington (DC) Business Journal, 5/29/05

An eminent domain push could be imminent at Skyland Shopping Center -- if the Supreme Court doesn't negate the debate

By Tim Lemke

D.C.'s National Capital Revitalization Corp. could begin using eminent domain to acquire properties at the Skyland Shopping Center as soon as June 1, paving the way for an upgraded retail complex on the site.

The quasi-public agency would do so even as the U.S. Supreme Court gets ready to rule on an eminent domain case in Connecticut that could stymie NCRC's plans. In the meantime, NCRC is engaging in last-ditch talks to buy through normal means the 14 remaining properties that make up Skyland.

NCRC now owns about 30 percent of the 16.7-acre site at the intersection of Naylor Road, Alabama Avenue and Good Hope Road in Southeast.

In a redevelopment that would be the largest retail project east of the Anacostia River in decades, NCRC wants to turn Skyland Shopping Center into a 240,000-square-foot retail destination with a large anchor store, grocery store and trendy shops.

Landowners who have ardently resisted selling say the shopping center is fully leased and has been sending increasing tax revenue to D.C.

They're also skeptical of recent NCRC efforts to provide them with an equity stake in the new development. Instead, some property owners have come together to present a development plan of their own, calling for a town-center style development with existing retailers but no big boxes like Target.

"We don't want to invest in a project we think will fail," says David Burka, a lawyer representing the Kogod Family, which owns the largest chunk of the remaining land.

NCRC selected McLean-based The Rappaport Cos. to develop the site in 2002. Rappaport says it has verbal commitments from Target and Shopper's Food Warehouse.

The project will cost $48.8 million to develop, according to NCRC, but Burka says that figure is far too low.

NCRC says it will consider the landowners' proposal if the community and Rappaport agree to it.

"We're really pushing for private deals," says Ted Risher, a senior development manager at NCRC. "The eminent domain is something we'll deal with at a later date."

NCRC, however, has been under consistent pressure from the D.C. Council and neighborhood groups to move quickly on the project, in the works since 2001.

The agency insists its plan reflects what the surrounding community wants. It has received support from most of the neighborhood commissioners, along with Ward 7 Councilman Vincent Gray and At-Large Councilman Kwame Brown, a resident of Southeast's Hillcrest neighborhood.

"I've never encountered a person who was against the redevelopment that didn't have a financial stake," Risher says. "This vision was totally driven by the community."

The Supreme Court in February heard arguments in a case from New London, Conn., where the city wanted to take 16 homes by eminent domain and replace them with a hotel, condominiums and office space. The court is expected to decide whether eminent domain can be used for economic development.

"The Supreme Court is hopefully going to define further the boundaries of what constitutes a permissable condemnation," says Earl Segal, a partner with Akin Gump Strauss Hauer and Feld, who has worked on eminent domain cases. "They're deciding it in the context of what can be done in the name of economic development."


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